Chrysler CEO, LaHood held secret meeting to avert Jeep fight

David Shepardson Detroit News Washington Bureau

Posted:
06/23/2013 12:04:07 AM MDT

Updated:
06/23/2013 10:57:49 PM MDT

A secret meeting June 9 between Chrysler Group LLC CEO Sergio Marchionne and Transportation Secretary Ray LaHood at a Chicago airport helped avert a major clash between the Auburn Hills automaker and federal auto safety regulators over 2.7 million Jeep SUVs that regulators said posed a fire risk.

Six days before that meeting, the National Highway Traffic Safety Administration had formally asked Chrysler to recall 2.7 million Jeep SUVs, citing reports of 51 deaths in rear-impact crashes after fires that NHTSA blamed on ruptured gas tanks located behind the rear axle. The Auburn Hills automaker insisted the vehicles were safe and that it would fight any recall.

Marchionne led the charge against NHTSA, repeatedly saying in the days afterward that the vehicles did not have a safety defect. It looked as if the sides were headed to a formal hearing over the issue, and perhaps a court battle to force a recall. But that could have hurt the Jeep brand's reputation, and a hearing could have included emotional testimony from victims' relatives.

LaHood, who is expected to step down from his post June 28 if a successor is named, disclosed in an interview in his office Thursday with The Detroit News the events that led to a deal.

After NHTSA Administrator David Strickland told LaHood that Chrysler wasn't going to go along with a recall, LaHood said he would call Marchionne. "I said, 'I want to find out if Sergio is involved in these decisions,'" LaHood said. LaHood suggested the three meet in person. "We need to figure this out," he told Marchionne.

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So on Sunday, June 9, the three met at the Federal Aviation Administration office at O'Hare International Airport. LaHood drove up from his home in Peoria, Ill., while Marchionne flew in from Italy and Strickland took a flight from Washington. After a tough, hour-long "frank" meeting, the sides agreed to try to settle the matter, and Marchionne sent a team of engineers to Washington the next day to work with NHTSA on the outlines of a fix.

"Once he (Marchionne) met with David and I in Chicago, he knew this had to get done," LaHood said. "(Marchionne) didn't realize how serious this was, how serious we were, and the thing was resolved satisfactorily. .... We pretty much reached an agreement there."

The deal was sealed Tuesday in a call between LaHood and Marchionne, on the day of the deadline for Chrysler to respond to NHTSA's recall request.

Chrysler on Tuesday disclosed the details: It said it would recall 1.56 million 1992-98 Jeep Grand Cherokees and 2002-07 Jeep Libertys. Chrysler said the fix for those vehicles is a trailer hitch assembly that will protect the gas tank, which is located between the rear axle and bumper, during rear-end crashes. Jeeps that already have factory-installed or Mopar hitches won't need to get a new hitch.

For the additional 1.2 million 1999-2004 Jeep Grand Cherokees that NHTSA wanted recalled, Chrysler will offer a service campaign and will replace non-factory-installed hitches. It will not, however, install hitches for those vehicles without hitches.

But Chrysler said the hitches will only be a benefit in low- and moderate-speed impact crashes. Some auto safety advocates want NHTSA to do more to protect Jeep owners during high speed crashes; Chrysler says there is no evidence that the Jeep SUVs fare any worse than similar SUVs in high speed crashes.

Even though NHTSA has a pending investigation, LaHood said he is "absolutely" satisfied with the fix. "It means that (owners) will be protected," LaHood said. "The trailer hitch protects them from an explosion. ... It's the right fix."

Despite intense criticism by Chrysler of NHTSA's analysis and its nearly three-year-investigation, LaHood stood by the agency. "The reason we have credibility is we don't talk from our hearts. We talk from data and we base our decisions on data, and when we started talking data with Sergio ... I think he understood what was at stake here ... We kept getting data from Chrysler, and we knew that there was a problem."

LaHood's message was "figure out how to fix it and let's get it done." He credited Marchionne's direct involvement with reaching a deal. "There were too many other people intervening," LaHood said. "I'm not sure he was getting all of the information he should have been given."

LaHood said Chrysler agreed to settle the dispute and make fixes partly because NHTSA had shown during the Toyota Motor Corp. sudden-acceleration recalls that it put safety first. Toyota paid nearly $70 million in U.S. fines.

"Sergio and David and I had some very frank conversations over the last couple of weeks, and I think at the end of those conversations, he knew: This is a no-nonsense organization," LaHood said. "The thing that really set us on a course where people understood that was the Toyota (sudden-acceleration recalls) -- the fact that we fined them the maximum fines twice."